Statement by Maureen A. McLaughlin, Deputy Assistant Secretary for Policy, Planning and Innovation, On the Fiscal Year 2002 Request for Postsecondary Education ProgramsBefore the U.S. House of Representatives, Subcommittee on Labor, Health and Human Services, and Education Appropriations, Ralph Regula, Chairman

I am pleased to appear before you today to discuss the Department of Education's postsecondary education budget for fiscal year 2002. Our budget complements the Administration's request for elementary and secondary education and supports the President's commitment to providing access to quality education at all levels for every American.

In today's information-based, high-tech global economy, individual economic success as well as America's continued economic prosperity, international leadership, and long-term security increasingly depend on maintaining a highly educated, flexible, and productive workforce. The President's plan for education envisions a seamless K-16 education system in which high standards of achievement will prepare all students to enter and succeed in college. Currently, low-income and minority students continue to be underrepresented in higher education, and a disproportionate number of those who do enter college do so without the academic preparation needed for success.

Our budget for postsecondary education would expand support for Federal programs that help prepare low-income and minority students for postsecondary education, student financial aid programs that help students and families pay the rising college costs, and programs that strengthen postsecondary institutions serving large proportions of minority students.

In order to increase support for areas of greatest need while remaining within the President's limit on discretionary funding, we are proposing to eliminate a number of small programs that can be supported under existing programs or under the President's No Child Left Behind education initiative, or for which there is no demonstrated need.

STUDENT FINANCIAL ASSISTANCE

The President is committed to making sure that every student has the opportunity to attend college by helping to make college more affordable for all Americans. We are proposing an increase of $1 billion for the Pell Grant program to increase the maximum award by $100, raising the maximum award to $3,850 -- the highest ever -- and providing Pell Grants to over 4 million students. We are continuing to support other need-based student aid programs and both the FFEL and Direct Loan programs. Our request would make available approximately $50 billion in student aid, excluding loan consolidations, to over 8 million students. The Pell Grant program, the foundation of the Federal student assistance effort, has been the most effective and well targeted program in helping deserving low- and middle-income students attend college. In 1998-1999 approximately 85 percent of Pell Grant recipients had annual family incomes of $30,000 or lower, and approximately two-thirds had incomes of $20,000 or lower.

Recent program data indicate that more students are applying for Pell Grants, and more of those applying are eligible to receive aid, than was previously forecast. As a result, the cost of funding awards for the 2001-2002 award year increased by $117 million; this additional prior-year need would be funded from the proposed $1 billion increase. In addition, the fiscal year 2001 appropriation used $319 million in surplus funds from prior years to fully fund the maximum award level of $3,750. In the absence of these supplemental and surplus funds, $436 million of the proposed $1 billion increase for fiscal year 2002 is needed to maintain the previous year's funding level, replacing the $117 million and $319 million used in fiscal year 2001. An additional $78 million is needed to fully fund a $3,750 maximum award in fiscal year 2002. Increasing the maximum award by $100, to $3,850, for academic year 2002-2003 requires $312 million, with the remaining $57 million of the proposed $1 billion set aside to account for possible further growth in program costs.

To supplement the funds available under the Pell Grant program, we are proposing to continue support at current levels for the Federal Supplemental Educational Opportunity Grant and Federal Work-Study programs, at $691 million and $1.011 billion, respectively. Our budget also includes $100 million in continuing support for the Perkins Loan Program Capital Contributions, and $60 million for Perkins Loan Cancellations. Through a combination of grants, loans, and work-study, these programs provide institutions with the flexibility to best meet the needs of low- and middle-income students.

We are proposing to continue the Leveraging Educational Assistance Partnership (LEAP) program at $55 million. This level of support includes $25 million to provide States with additional flexibility in meeting the needs of their students under Special LEAP. We are also requesting $1 million for the second year of the Loan Forgiveness for Child Care Providers program to enable this demonstration program to continue on a limited basis while its effectiveness is evaluated.

In fiscal year 2002 students and their parents will take an estimated 9 million loans, borrowing approximately $36.5 billion under FFEL and the Direct Loan program. The Administration is committed to supporting both loan programs. To encourage more students to enter math and science teaching, the Administration is proposing to increase substantially the maximum amount of loan forgiveness for math and science teachers at qualified low-income schools - from $5,000 to $17,500.

The Administration is also proposing a number of tax benefits to provide students and families with greater choice in postsecondary education. These benefits include increasing the annual contribution limit to education savings accounts to $5,000; extending tax-exempt prepaid tuition plans to private colleges and universities; allowing tax-free distributions from qualified State tuition plans for certain higher education expenses; and extending the exclusion for employer-provided education assistance.

HIGHER EDUCATION PROGRAMS

America's higher education population continues to increase, both in size and in ethnic and racial diversity, creating new challenges for our colleges and universities. Today's enrollment of 15 million is expected to increase by another 2.5 million by the end of this decade. Increasingly, these students will be minority and first-generation college students. To complement the significant Federal investment in student aid, we are proposing to increase assistance to institutions of higher education that serve large populations of low-income and minority students to help them meet the needs of these students.

Our budget includes additional support for Historically Black Colleges and Universities (HBCUs) under Title III and Hispanic-Serving Institutions (HSIs) under Title V to help these institutions meet the growing demand for their services. We are proposing to increase funding for Strengthening HBCUs by $12 million and Strengthening Historically Black Graduate Institutions by $3 million, for totals of $197 million and $48 million, respectively. These funds would further strengthen these institutions' academic programs and administrative and fundraising capabilities. We also propose to increase support for HSIs by $4 million, for a total of $72.5 million, to help ensure that Hispanic students have access to high quality postsecondary education, and to help close the achievement gap between Hispanic and non-Hispanic students. Our budget would continue support for the Strengthening Institutions program at $73 million, Tribally Controlled Colleges and Universities at $15 million, Alaska Native/Native Hawaiian Serving Institutions at $6 million, and the Minority Science and Engineering Improvement Program at $8.5 million.

In order to take full advantage of the opportunities for postsecondary education, many students need additional assistance, particularly those who are economically disadvantaged and whose parents have not attended college. In fiscal year 2002, we are requesting an increase of $50 million for TRIO, for a total of $780 million. These funds would support new competitions in Talent Search, Educational Opportunity Centers, and Staff Training and would enable programs to increase the intensity of their services, which has been shown to have a positive impact on student outcomes. The additional funding also would support technology supplements in TRIO projects to help bridge the digital divide, and would continue special funding priorities initiated over the past 2 years to increase retention and success in secondary and postsecondary education.

We are requesting $227 million for Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) to support on-going projects and cohorts of students. New cohorts would not be added except in projects that do so with non-Federal resources. The GEAR UP program has increased rapidly since it was initiated in fiscal year 1999, and our request would provide an estimated 1.15 million students with the academic and financial support they need to enter and complete postsecondary education.

In fiscal year 2002, we are requesting $51.2 million for the Fund for the Improvement of Postsecondary Education (FIPSE) to continue support for exemplary innovative reform and improvement projects. Our request also continues support for academic mobility and student exchange programs with Mexico, Canada, Brazil, and the European Union. In addition, these funds would support on-going projects initiated under the Learning Anytime Anywhere Partnerships (LAAP) program. We are not requesting funds for LAAP because we believe that similar activities can be supported under FIPSE's Comprehensive Program. We also believe that activities supported under Demonstration Projects to Ensure Quality Higher Education for Students with Disabilities can be funded under established programs such as FIPSE's Comprehensive Program.

To encourage academic excellence and to help ensure that America has the high level of skills and knowledge needed in the 21st century, we are proposing $10 million for the Javits Fellowships program, $31 million for Graduate Assistance in Areas of National Need, and $41 million for the Byrd Honors Scholarships program. To enable low-income parents of young children to attend postsecondary institutions, we are proposing to continue support at the current level of $25 million for Child Care Access Means Parents in Schools.

Our fiscal year 2002 request also includes funding at the current level of $67 million for domestic International Education programs, and $10 million for overseas programs. These programs help to develop and maintain the international and foreign language expertise that is essential to America's international leadership role, and continued Federal support for them is important to our national interest.

Our budget includes $54 million to fund on-going projects under the Teacher Quality Enhancement Grant program, and we are proposing that some funds be used to continue support for two national evaluations of the program. We are not requesting funds for new projects as we believe that virtually all of the activities carried out under this program can be supported through the proposed State Grants for Improving Teacher Quality Initiative.

We are requesting $1 million for GPRA Data/HEA Program Evaluation activities. The decrease from last year's funding would be partially offset by the Administration's request for an evaluation set-aside under the Teacher Quality Enhancement Grants program.

CONCLUSION

We believe that our budget for postsecondary education honors the President's commitment to education by providing additional resources to the most pressing issues in postsecondary education, while at the same time adhering to the Administration's policy of fiscal restraint.

My colleagues and I will be happy to respond to any questions you may have.